Alex Blackburne outlines 10 signs that suggest sustainable investment – incorporating social, environmental and financial returns – is on its way to becoming a mainstream strategy for investors.
1. £8.6 trillion was invested sustainably or responsibly worldwide in 2012
According to the Global Sustainable Investment Alliance (GSIA), a network of the world’s seven largest investment forums, 21.8% of assets under management around the globe are invested sustainably. Sixty-five per cent of this total is invested in Europe, while a further 31% can be found in the US and Canada.
A subsequent white paper by the Network for Sustainable Financial Markets claimed that only around a tenth of this figure (£976 billion) was invested with sustainability in mind. However, the fact the remaining £7.6 trillion is classed by GSIA as sustainable, when it may have been invested in that way for purely financial reasons, is encouraging to say the least.
2. As a sector, its funds under management are growing at 20% a year
According to data from responsible investment research firm EIRIS, the average year-on-year growth of money invested in green or ethical retail funds in the UK was over 20%. In 1991, such funds had just £318m invested in them. By 2012, this figure was nearly £11 billion – over 3,300% higher.
3. It’s no longer a niche; the big finance and media players are talking about it
When a financial giant like UBS is writing about, and dedicating a whole report to, the fact sustainable investment has become mainstream, you would be foolish not to agree. Its July 2013 study concluded by saying sustainable investment offers investors “competitive investment results, the ability to make a beneficial impact on the world in which they live and an avenue for expressing their values through their investments.”
US stock exchange Nasdaq recently blogged about how the strategy had become mainstream, while even the relatively conservative Bloomberg and Financial Times have written about the positive upward trends in the sector.
4. It’s no longer about simply negative screening, but positive selection of fast-growth sectors and technologies
One of the common misconceptions about ethical investment (and perhaps a reason it’s evolved to be known as sustainable investment) is that it’s purely about excluding sin stocks like tobacco and pornography. This couldn’t be further from the truth.
In fact, sustainable investment in 2013 is often about selecting stocks based on their role in tackling key sustainability issues, such as climate change, environmental degradation and water scarcity. So this could be companies developing clean energy technologies, working in sustainable agriculture or coming up with innovative solutions to the population crisis.
Solely for treehuggers, it is not.
5. The range of different vehicles available is growing (funds, direct investment, community shares etc) – many of which are tax efficient
Investment generally is no longer the pastime of a select group of extremely wealthy individuals. Thanks to the growth of crowdfunding investment platforms and the many community share projects that have taken place across the country, almost anyone can be a sustainable investor.
For serious investors, though, things like the enterprise investment scheme and venture capital trusts have allowed them to invest in small-scale, fast-growth firms – many of which are promising social enterprises – while getting tax breaks in the process.
A wide selection of investors now see sustainability as a sensible, long-term financial decision.
6. Keeping the lights on is a concern for everyone
Clean energy and energy efficiency will be essential for UK energy security in the coming years. They will help diminish our reliance on fossil fuels – scarce commodities bought at volatile prices from unstable regimes – and help reduce greenhouse gas emissions to assist the climate change fight.
Billions are invested each year in renewables such as wind, solar, wave, tidal and biomass, and given the finite nature of high-polluting energy sources such as coal, oil and gas, money pumped into the sector is only set to increase.
A sustainable investment in energy can be anything from buying solar panels to stick on your roof at home to putting a few thousand pounds in an investment fund that looks to find clean solutions to the energy crisis.
7. The smart money is already invested sustainably
Britain desperately needs innovative and disruptive industries to create new jobs and help UK plc compete on a global stage. Smart investors have already seen the potential of emerging sustainable industries and technology and got in at the ground floor. Resource intensive sectors are seeking greater efficiencies and working with the insurgents to help them clean up.
Tax efficient schemes such as enterprise investment schemes, seed enterprise investment schemes and venture capital trusts have ploughed money into cleantech – renewable energy, energy efficiency, and so on. Many are now paying handsome returns to higher tax rate-paying investors.
Companies that persist with unsustainable practices and systems will experience increased public opprobrium, greater volatility in revenue, costs, profits and share price, and be increasingly viewed as unattractive to investors.
8. The unsustainable investment sector that created the current economic crisis is slowly changing
Storebrand, a major Norwegian pension fund and life insurance firm, recently revealed it would be divesting from 19 fossil fuel companies to ensure its investors got “long-term, stable returns”. This was the latest example of a mainstream institutional investor looking at a more sustainable investment strategy for financial reasons.
The economic crisis that began in 2008 was caused by the big banks. Plenty more has gone wrong with finance in the five years since, but out of the devastation has come alternative forms of investment that don’t have the unwanted baggage of the mainstream industry.
Investors have seen the effect that intense speculation and unsustainable gambling can have on their own money. Sustainable investment, by definition, prevents future crashes and protects your assets.
9. Rather than being an activity that only attracts the ethical as a form of philanthropic investment, it consistently delivers healthy returns
Ethical investment is no longer a synonym for negative screening. That much, we have already established. It is also not simply another form of philanthropy.
While sustainable investors often have philanthropic (it literally means a love of humanity) motives for investing sustainably, the financial returns harvested can be very healthy. Just like mainstream investment, there are good sustainable funds and there are bad. These funds often depend on the skills of the fund manager.
Find a good fund with a good manager, and you’re in business.
Similarly, things like renewable energy community share offers very often provide investors with better, more stable returns than they would get if they opened a savings account on the high street.
10. It’s being seen more and more as the right thing to do
Investors are increasingly seeing the flaws in profiting from other people’s misery and creating a world they wouldn’t want their children to inherit.
Investor alliances collectively worth trillions of dollars have consistently called for governments and the financial services industry to do something about climate change – or else face huge social, environmental and economic impacts.
Greater transparency is needed in investment – and this applies for green and ethical investment funds, too – to expose and highlight just what investors’ money is going towards. If you, as an investor or bank customer, are happy to fund atrocious human rights abuses, industries that kill people and the very destruction of our only planet, then so be it.
But sustainable, responsible and ethical investment is on its way to the mainstream, and those who deny that will find themselves very lonely, very soon.
How Going Green Can Save A Company Money
What is going green?
Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.
The first step in going green
There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.
Making needed changes within the company
After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.
Reducing the common paper waste
Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.
Make money by spreading the word
Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.
5 Easy Things You Can Do to Make Your Home More Sustainable
Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.
1. Weather stripping
If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.
Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.
Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.
2. Programmable thermostats
Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.
Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!
3. Low-flow water hardware
With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.
Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.
Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.
4. Energy efficient light bulbs
An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.
New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.
5. Installing solar panels
Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.
Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.
From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!
These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.
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